Consumer prices rose 0.4 percent in October from September, the Labor Department reported Tuesday, coming in above the 0.3 percent increase economists had expected.
Core prices, which strip out food and energy, rose 0.3 percent for the month, also higher than the 0.2 percent forecast. In September, overall inflation had been estimated at 0.6 percent and core inflation at 0.3 percent.
No year-over-year inflation figure was released for comparison because a government shutdown last October prevented the Labor Department from collecting and publishing the CPI at that time.
Looking at shorter-term trends, the three-month annualized rate of headline inflation now stands at 5.7 percent, with core CPI annualizing at 3.7 percent over the same period. Over six months, headline CPI is running at a 3.2 percent annualized rate and core CPI at 2.6 percent, pointing to a sustained pickup in inflation.
Shelter and Food Lead the Increase
Shelter prices rose 0.3 percent in October, and the Labor Department said that single category accounted for more than thirty percent of the overall monthly increase in prices.
Food prices rose 0.5 percent for the month. Within that, the food-at-home index, which tracks grocery prices, rose 0.4 percent, while food-away-from-home prices, covering restaurants, rose 0.5 percent.
Energy prices rose 0.7 percent in October, following a 5.2 percent jump in September. Gasoline prices rose 1 percent over the month.
Pressure Spreading Beyond Energy
The report suggests inflation is broadening beyond oil-related goods and services. Household furnishing prices rose 0.7 percent, and major appliance prices jumped 1.4 percent. Medical drug prices, which had been falling in recent months, rose 0.4 percent, and high-tech goods prices rose 0.4 percent.
Services prices also climbed. The broad category of services excluding energy rose 0.3 percent. Recreation prices and hospital services each rose 0.8 percent. Hotel and motel prices rose 0.6 percent, motor vehicle insurance rose 0.7 percent, physician services rose 0.4 percent, and airline fares rose 0.4 percent.
A measure known as super core services inflation, which excludes both energy and housing, rose 0.5 percent.
What It Means for the Fed
The stronger-than-expected inflation reading shifted expectations in financial markets for the Federal Reserve’s next meeting. Investors increasingly expect the central bank could raise interest rates by a half percentage point, a bigger move than the quarter-point increase that had been anticipated before the report.
